One of the fundamental principles of a free market economy is that resources (e.g., products, services, money . . . ) will tend to be redistributed by voluntary transactions in a manner that maximizes wealth and/or utility to all parties involved in the transactions. For example, the price paid for a particular resource in a voluntary transaction is representative of the value of that resource to each party. Thus, monetary transactions provide a common measuring stick for comparing the relative values that different persons attach to particular resources. As such there is a natural tendency for competition between both buyers and sellers to efficiently allocate the resources and create markets that can be measured and analyzed in terms of money.
Of course different individuals will prioritize the value of resources in different ways. For example, one individual may favor higher quality while another favors lower cost, e.g., automobiles vary widely in price and quality, but ultimately, voluntary transactions between the buyer and the seller will ensure markets work efficiently from the perspectives of both supply and demand because all resources will tend to go where they are most highly valued.
Unfortunately, this efficiency can be disrupted in certain situations, such as when the value of a resource is detached from the market for that resource. Such a condition has arisen, for example, in the search engine space. Search engines are generally free for the end-user, yet it is the advertisers who pay for the use of the search engine by the end-user. Therefore, the value of the resource (search engine) is detached from the market for that resource. This unfortunate condition can also affect Search Engine Marketers (SEMs). SEMs are those who market advertising space on search engines to advertisers. SEMs are concerned with locating, researching, submitting, and/or positioning an advertisement (e.g., for a product, service, website, . . . ) within the proper search engines for maximum exposure and effectiveness. SEMs may also include the function of choosing the target keywords and keyword phrases for a website's meta tags, or some range of marketing techniques required to make the advertisement visible on search engines and/or directories so as to attract visits from a target audience.
Advertising is generally considered to be a capable means for producing revenue in most commercial markets or settings. Recently, the Internet and, specifically, Internet search engines have shown that they can be a viable alternative to conventional advertising. Accordingly, advertisers are increasingly looking toward SEMs and search engines to advertise their products and services. However, in this situation, advertisers are seeking markets for their advertisements whereas the target audience (e.g., a potential consumer) of those advertisements is seeking the perceived value of the underlying search engine. Hence, there is a separation between the value of the advertisement to the consumer (e.g., price, quality, . . . ) from the market for that resource.
One reason for this situation is because advertisers must pay for the advertisements whereas the users of search engines do not pay for exposure to the advertisements, so the users are not inclined to regard the value of the advertisements when choosing a search engine. For example, considering the user of a search engine is not likely to be using the service to find advertisements, the underlying value of an advertisement is not driven by the market for such. Hence, unlike the advertiser, the search engine provider is not motivated to obtain advertisements that are highly valued from the viewpoint of the user, even though advertisements may be the only source of revenue to the search engine provider. Rather, search engine providers are inclined to only accept advertisements from advertisers who paid the most for that space. In essence, there is no longer an effective price competition mechanism because search engines do not need highly valued advertisements in order to maintain or increase market share among users. Moreover, this market inequity has been further exacerbated by an effective oligopoly among search engine competitors that has begun removing alternative markets. This situation undermines the advertiser's ability to respond to price competition among the search engine providers.
This is an inefficient scheme for consumers because they may not be presented with the most highly valued ads. It is also inefficient for search engine competitors, because, while ad sales may be the primary (or only) source of revenue, this revenue source is driven by the search engine's market share among users, which is not conventionally enhanced by ad space. Similarly it is inefficient for advertisers who are increasingly faced with either higher costs and/or dwindling user exposure to ads without regard to the merits of the advertisements.
Currently, there is no good way to unite the value a consumer places on an ad with the price the advertiser must pay the host of the add in order to form a viable market dynamic. Recent attempts have been made to provide rankings for ad space. One such system in use today is simply to auction the ad space to the highest bidder. Of course this method simply maintains the status quo, leaving advertisers with no bargaining power other than money, and depriving consumers of markets for highly valued ads from advertisers with low marketing budgets. Another way of ranking ad space is to calculate a click-through rate (CTR).
The CTR is an estimate on the probability that a user clicks an ad if the ad is shown. Generally, the CTR is based upon prior click history of the ad, yet oftentimes, an advertiser only pays the host of the ad (e.g., a search engine provider) when a user actually clicks on the advertisement, for example pay-per-click (PPC). In another example, the user can be rewarded for clicking on the ad instead of or in addition to rewarding the host. However, these schemes inherently rely on the notion that the value of the ad to the user will be fairly represented based on the number of users who click it, and thus, it would be an appropriate measure of the value of the ad space to the advertiser to be employed with the CTR estimate. Unfortunately, in both case, this could lead to “click fraud” wherein both the user and the host are motivated to defeat the advertiser's goals. For example a user is induced to merely click on ads, either for the user's own gain or for the gain of the host (e.g. when the host provides a “kickback” to the user), rather than for a bona fide interest in the advertiser or for a genuine desire to even consider the advertisement. Accordingly, for CTR to remain a viable ranking measure, click fraud should be mitigated. Another scheme employed by search engines is to reward users for search activity. However, this could lead to a similar type of activity fraud wherein the users might search only for the sake of the reward rather than for genuine reasons. Such search activity is not very useful to attract advertising dollars, and should be mitigated as well.
Conventional ranking systems tend to rank ads only from the perspective of the underlying host, with no good mechanism to account for the values and behavior of the advertisers and consumers. Accordingly, there is a strong need to provide a way of ranking ad space that diversifies the bargaining power among the actors, sets competitive market dynamics and re-introduces efficient price-competition to SEMs and the web search engine market.
Additionally, in the Internet search engine space, there does not exist an ability to monitor transactions between an advertiser and a consumer, even if the consumer was directed to the advertiser's website by the search engine and the transaction took place entirely online. Unlike well-known auction websites that require a great deal of personal information and legal contracting, the search engine providers typically do not care if consumers are satisfied with an advertiser as long as the top dollar is paid for the ad space. Conversely, consumers do not currently view search engine providers as an outlet to settle disputes because they cannot monitor the transactions. Thus, a way for search engine providers to confirm transaction and react to feedback and disputes between consumers and advertisers would be of great benefit.